Tuesday, February 24, 2009

The modified home buyer tax credit and the restoration of last year's high-cost conforming and FHA loan limits of $729,750 could boost 2009 home sales by 450,000, NAR Chief Economist Lawrence Yun estimates. When combined with the historically low mortgage interest rates stemming from NAR-backed actions taken by the Federal Reserve and U.S. Treasury Department earlier this year, the boost in home sales could total 850,000.

Wednesday, February 18, 2009

I have been getting a lot of phone calls on the $8,000 first time homebuyer tax credit. Here is how it works,

New Stimulus Plan PassedOfficially titled the American Reinvestment and Recovery Act of 2009, it is the largest spending free-for-all in history. But does it do anything for housing?There are really only two provisions that address housing. First it allows the temporary increases in conventional loan limits for high cost areas to remain. Secondly, it expands the First Time Homebuyer Tax Credit. The First Time Homebuyer Tax Credit was already in effect last year but was set to expire July 1, 2009. It has now been extended to December 31, 2009. Here is how it works: - Up to an $8,000 tax credit for a first time home buyer that purchases a primary residence. - A “first time home buyer” is someone that has not purchased a home in the past three years but they are allowed to have owned a home prior to that. - There is an income cap of $95,000 for a single filer and $170,000 for those filing jointly (modified adjusted gross income). - You can decide to apply the tax credit to your 2008 return or your 2009 return. - This is not free. You have to pay the money back by getting a smaller refund each year until it is repaid. - There is the ability to Request a Waiver of Requirement to Repay the tax credit if you meet certain conditions and you occupy (not just own) for at least 36 months. - Uncle Sam is not going to be mailing anyone an $8,000 check that buys a home. - State housing loans are now eligible for this program.

It used to be that if you used MFA you could not get the tax credit. The stimulas package now allows people who use MFA to get the tax credit. I am verifying that the local office agrees.

Wednesday, February 11, 2009

Japanese government officials are talking about eliminating a 40% capital gains tax for most foreign investors, with an eye towards attracting some much-needed foreign investment capital. According to Bloomberg News, the government is planning talks with state-owned sovereign wealth funds from Saudi Arabia, UAE, Qatar and Kuwait to discuss more favorable investment conditions in Japan. Japan has one of the highest capital gains taxes, which has impeded foreign investment, contributing to the down climate. Only 4% of the funds managed by Japan’s private-equity and venture-capital comes from abroad, as compared to the 75% in the UK, 60% in the EU and 20% in the U.S., reports The Wall Street Journal. The economic news from Japan, as like other world regions, has been gloomy. In Q4 of 2008, Japan’s unemployment jumped from 3.9% to 4.4% as consumption fell 4.6%. As consumers abroad pull back on consumer spending, Japan’s population is unable to consume enough to offset the losses. The tax alteration could come as early as April 1 and boost investment from foreign funds by as much as 400% in the next few years, says Japan's Ministry of Economy, Trade and Industry (METI). If the Parliament passes the measure, the lack of a capital gains tax would make Japan, which is the 2nd largest economy in the world, one of the cheapest places to invest. While the METI website does not yet speak specifically to this plan, there is extensive English language information on inbound FDI.

While much of the world's property markets are grappling with a drop in prices and the global credit crisis, a few markets, among them Brazil, Mexico and Turkey, are on the rise, according to a recent series of Knowledge@Wharton (KW) reports. Markets that tend to be less dependent on credit are faring better with the global credit crisis, whereas much of Western Europe, the U.S. and Japan, where there was easy access to debt, are being most hard hit. Investors should not assume, however, that all markets with a low debt ratio are good for investment. A lack of transparency and corruption both ranked high as reasons to avoid particular markets by participants in the 2009 KW Real Estate Emerging Markets Forum. Other factors included poor infrastructure, unhealthy regulatory environment, bureaucracy and a deficient legal environment. Knowledge@Wharton is an online resource providing access to the thinking of some of the top business minds on issues including finance, marketing, business ethics, and real estate. Read comments by participants on markets to avoid as well as healthy markets, or read a summary article from the Forum on Where the Deals are in Emerging Real Estate. Regardless of opportunity, Forum participants agree that investors should not try to enter a market without a trusted local partner who understands the local environment and business norms. Search for a Certified International Property Specialist (CIPS) in more than 50 countries to assist with outbound investments.

For the fourth year, France has earned International Living magazine’s top spot as best places to live in the world on its Quality of Life Index. The retirement and relocation publication compared about 200 countries in nine categories including, cost of living, culture, economy, environment, freedom, health, infrastructure, safety and risk, and climate. Information was combined from official government sources, the World Health Organization and The Economist. Then editors asked for opinions from knowledgeable people around the world. France scored high marks across the board, but its main appeal is its culture and leisure activities. For Americans seeking a European retirement home or investment opportunity, France is a relative bargain compared to six months ago when the exchange rate made the euro worth nearly $1.60. Currently the euro is worth roughly $1.30, a difference which translates into a more than a $50,000 savings. Following France on the list of top places to live are Switzerland, United States, Luxembourg, Australia, Belgium, Italy, Germany, New Zealand and Denmark. See the complete list of countries in order of overall rankings. Click on any country to view individual category rankings.

Foreign investors in real estate expect to spend significantly more in '09 than they did in '08, according to the 17th annual survey of members of the Association of Foreign Investors in Real Estate (AFIRE). Compared to transactions completed by October 2008, foreign real estate lenders say they plan to increase lending by 54% globally and by 58% in the U.S. Equity investors plan to increase investment activity by 40% globally and by 73% in the U.S. Survey respondents hold approximately one trillion dollars of real estate, including $371 billion in the U.S. Respondents again ranked the U.S. as the country providing the most "stable and secure" real estate investments, by a wide margin at 53%. Germany and Switzerland tied for second most stable at 11.3%, Tied for 3rd were Australia and Canada, each with 4.8%. Half of the top 10 global cities favored by foreign investors are in the U.S., a shift from last year's survey where half of the top 10 cities were in Asia. Washington, D.C. reclaimed it status as the top global city for foreign investors' real estate dollars, deposing New York City, which was third is a close ranking with second-ranked London. Tokyo and Shanghai ranked fourth and fifth, respectively. When asked about best opportunity for asset appreciation, the U.S. was also named first with 37% of the votes. Brazil jumped 10 places into the #2 spot, replacing China, which dropped to #3, followed by the U.K. (up from 9th) and India (which fell from 3rd). Other key findings included that apartments were the preferred U.S. investment property, followed by office, industrial, retail and hotel, a shift from office being most preferred the past two years. Also, nearly 75% said a U.S. property’s “green” features influenced their purchase decision and were worth a rental premium. Survey respondents reported that finding attractive U.S. investment properties is becoming less difficult. Read a detailed summary of the findings.

Qualified renters in Fannie Mae-owned foreclosed properties can stay in their homes under a national real estate owned (REO) rental policy the company released in mid-January. The policy applies to renters occupying a property at the time Fannie Mae acquires the foreclosure. Renters occupying any type of single-family property are eligible, including residents of two- to four-unit properties, condos, co-ops, single-family detached homes, and manufactured housing. Eligible renters are offered a new month-to-month lease with Fannie Mae or other assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code. For more info contact Jeff Lischer, 202/383-1117.

Since commercial property performance usually tracks economic conditions, it will come as no surprise that 2009 looks like a challenging year for commercial real estate owners, brokers, and managers. Any way you look at it 2009 will be a tough year, but multifamily could be a bright spot. Read NAR’s Commercial Outlook.

NAR’s forward-looking index, based on contracts signed, rose 6.3 percent in December. Big gains in the South and Midwest offset modest declines elsewhere, according to the latest NAR report. Read more >